Coinbase has initiated a regulatory application with the U.S. Securities and Exchange Commission to launch tokenized equity trading which would transform stock market transactions.
The crypto exchange plans to transform traditional stock ownership through blockchain-based tokens which represent shares according to Chief Legal Officer Paul Grewal. The approval of Coinbase would establish it as a direct competitor to retail brokers Robinhood and Charles Schwab.
The implementation of tokenized equities would reduce trading expenses while allowing continuous market access and accelerating payment processing. The implementation of this model encounters multiple regulatory obstacles together with infrastructure challenges. The World Economic Forum identifies restricted market liquidity and inconsistent worldwide standards as the main obstacles to adoption.
The SEC requires Coinbase to obtain either exemptive relief or a “no action” letter because the company lacks broker-dealer registration status. The SEC filed a lawsuit against Coinbase in 2023 under Biden administration leadership but the case was dismissed during the current year.
The U.S. crypto firm Kraken has already started offering tokenized stock trading outside American borders. The approval of Coinbase’s bid would help establish tokenized technology as a legitimate solution for American markets if regulators grant their permission.
